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Five tips to manage your money wisely

Follow these five tips and you’ll be on your way to managing your money like a pro.

Noreen Shazreen

Probably the coolest cat lady you’ll ever meet.


Published: 31 March 2021, 1:36 PM

Learning to manage your money often marks the start of adulthood. 

As you begin your first job, you now have the freedom to make your own choices when it comes to handling money. But how can you be sure that you are making the right decisions? 

Well, here are five tips to help you manage your money better.

1. Create a monthly budget

The first crucial step to managing your money is to create a comprehensive monthly budget. To get started on your budget, you will need to work out the amount of money that goes into different areas of your life such as transportation, food, personal expenses, household bills and more. 

Don’t worry, financial experts around the world have recommended this simple allocation framework for you to follow. 

 

The Central Provident Fund (CPF) Board also recommends the 40-30-20-10 rule as a guideline for Singaporeans to allocate their finances. PHOTO CREDIT: FACEBOOK/CPF BOARD

 

About 40 per cent of your income should be allocated towards long-term expenses such as education, car, and housing expenses, while about 30 per cent should be allocated for necessities such as food, transportation, bills, and entertainment. About 20 per cent of your income should be saved for financial goals such as retirement, while the remaining 10 per cent should go towards insurance for protection in case of any emergency events. 

You can create your budget using a spreadsheet or just write it down with a pen and paper. Remember to always refer to your budget regularly throughout the month to help guide your spending decisions. 

This will also help to ensure that you are on the right track to achieving your short and long-term financial goals.

2. Research for the best prices

Before making a purchase, make sure that you have done thorough research.

 

Checking online for great deals is a crucial step to ensure that you are making the most out of your money. PHOTO CREDIT: CHRISTIN HUME VIA UNSPLASH

 

You can make the most out of your budget by comparing the price of the same item online to ensure that you are buying it at the best price. Otherwise, look for discounts, vouchers and cheaper alternatives when possible.

For certain items, you can possibly get it secondhand on platforms such as Carousell for a cheaper price as well. 

While secondhand clothing won’t necessarily give you the best quality, it’s a great way to cut down on your expenses while being an environmentally-conscious consumer. There are also occasions when the owner of the item may have bought the wrong size or have not worn that piece of clothing before too. 

3. Track your spendings

Keep all of your receipts and record all of your purchases.

A great way to track your spending is by using personal finance tracker apps such as Spendee and Seedly. These easy-to-access applications can help you cultivate a habit of tracking your daily and monthly spending.

Both mobile apps are available on the App Store and Google Play.

 

Finance tracking apps such as Seedly can help you find out which areas you may be overspending unknowingly. PHOTO CREDIT: SCREENSHOT VIA APP STORE

 

Both finance tracker apps are suitable for beginners. Seedly also has a unique feature that allows users to do budgeting and monthly financial comparisons. 

Tracking your spending habits will allow you to understand your expenses and help you to avoid overspending.

4. Contribute to your savings regularly

When it comes to saving money, every little bit counts.

 

Setting aside a fixed amount of savings each month can help you achieve your short and long-term financial goals. PHOTO CREDIT: MICHEILE HENDERSON VIA UNSPLASH

 

If you are above 18 years old, you may opt for the OCBC 360 Account to start your savings account. It provides you with interest rates if you credit your salary with them each month. 

OCBC Bank also allows you to sort your savings into six different categories, with an option for you to customise your own goals. Your money will automatically go towards your savings goal with no separate account needed. 

Similarly, the UOB One account also allows you to earn bonus interest, albeit with minimum spending of $500 each month. 

5. Only spend what is left after saving

The famous American business tycoon Warren Buffett once said: “Do not save what is left after spending, but spend what is left after saving.”

Most people tend to spend their money first and only try to save or invest the amount that is left. This is a common mistake that youth make when they first receive money on their hands. 

While it may seem exciting to splurge and go on shopping sprees during payday, it is important to take the time to set aside a fixed amount of money to save.  

 

You should set aside an amount of money from your income for saving first before spending. PHOTO CREDIT: JACEK DYLAG VIA UNSPLASH

 

With that in mind, it is important to inculcate a habit of saving. This way, you can manage your money better and cut down on certain living expenses.

Being good at managing money takes time and practice. Hopefully, these five tips will help you manage your money wisely as you progress into adulthood.

By knowing how to better manage your money, you will be able to afford your living expenses, keep your debts to a minimum and live comfortably without any money anxieties.


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